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Unclaimed rebates cost taxpayers

At a time when President Bush and the nation's governors are proposing billion-dollar cuts to control Medicaid spending, the government is failing to recover rebates owed by drug manufacturers as the price for having entree to the federal-state health care plan for 50-million poor people. Federal authorities have been warned for years that weak, outdated oversight practices had effectively robbed taxpayers of millions, if not billions, of dollars.

Under the Medicaid plan, drugmakers are supposed to pay rebates to the states, based on the "best price" charged to other buyers. But a recent report by the Government Accountability Office, the investigative arm of Congress, found that the federal Medicaid agency "conducts only limited checks" on the accuracy of drug prices. Manufacturers had no clear guidelines on how to determine "best price," investigators found. The government left the pricing mostly to the industry, rarely called its methods into question or followed up to ensure that pricing errors were corrected. The GAO did not put a price tag on losses, largely because the system is so flawed a figure is impossible to compute.

Getting a grip on rebates owed the states is fundamental to any reform, especially as the health care system continues to focus on outpatient services. The GAO found the government not only lax but slow to apply the rebate schedule to newer players in the market, such as prescription plan providers who negotiate in bulk on behalf of employers and group health insurers.

Before the government cuts funding for Medicaid, it should at least collect what the drugmakers legally owe the taxpayers.

[Last modified May 17, 2005, 01:37:19]